In the past few days, the New York State senate has been negotiating changes to the city’s rent stabilization laws that expired on June 16. One million New Yorkers currently live under this 1946 law. The tentative legislation would change the rent stabilization system in a way that would lead to its eventual elimination, and completely transform the fabric of this colorfully diverse city.
Rent stabilization and control has always been a way to protect against the rapidly rising market rate of real estate and keep New York City available for people of low-income levels. Rent regulation protects tenants in privately owned buildings by limiting rent increases. Under the previous legislation, a landlord could only deregulate a rent-stabilized apartment if and when it went vacant, if the rent surpassed $2,000 a month, or if the family’s income passed $175,000 a year. Under the tentative deal, the $2,000 limit for both vacancy and income would be increased to $2,500 a month, and the minimum family income would be increased to $200,000 a year. By raising the income limit, more middle-class residents would be protected by rent stabilization, a provision contested by landlords and low-income residents who would then have more competition for already limited units.
Governor Andrew Cuomo advertises that this deal strengthens and extends rent stabilization, but tenant advocates do not see this as real reform. Although landlords would have to pay more for renovations in order to deregulate vacant apartments, the deal still allows the deregulation of rent stabilized units — crushing the decade long hopes of tenants and tenant advocates.
In New York City, the affordability of housing has always been a problem. Even neighborhoods that have been historically low income, such as Harlem and the Lower East Side, currently have high rental levels. For example, a 2008 Furman Center study shows that the Lower East Side had a median market rate of $2,420, while the median for rent stabilized units was $986; Central Harlem had a median market rate of $1,560, and rent stabilized rate of $768. Manhattan has an overall median market rate of $2,620, and a median rent stabilized rate of $1,111. The other four boroughs have median market rates that are about $1,000 less than Manhattan.
To compare, the median household income for Harlem residents ranges from $17,000 to $33,000. Naturally, under these rates, people would have to spend at least half of their salary on rent. It is doubtful that those living under rent stabilization protections would be able to stay in their neighborhoods if they were forced to pay market rate prices. Displacement would be inevitable, a common and terrible reality for the urban poor.
One major reason for the housing affordability problems in New York City is the imbalance between supply and demand. The high cost of construction in the city remains one of the highest in the nation. The hard costs of development alone are 39% higher than the national average and 8% higher than the next most expensive city, San Francisco. Obviously, the availability of land, or lack thereof, in New York City influences the high costs of construction.
Let’s be clear: The housing cost to income burden is not only a problem for the city’s poor, but also for households throughout the income spectrum. New York City has always been admired for being one of the most ethnically diverse cities in the nation; however, its diversity goes beyond ethnicity, and includes people from different income levels, professions, and lifestyles. The rapidly changing real estate market threatens this diversity, along with the future of New York City.
New Yorkers have made their sentiments clear: Market rates needed to freeze when the economy did. In order to create a real estate market that protects the invaluable diversity of New York City, legislators have to stop edging towards the demise of the rent stabilization system and instead create more incentives for the construction of affordable housing. If not, Manhattan and the rest of New York City will only be for the wealthy.
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